In February the RICS, Society of Professional Economists (SPE) and CaCHE organised a debate on the state of the housing market entitled ‘Housing for all?’. Chaired by Dame Kate Barker, the evening was centred around two talks by Jeffrey Matsu (Senior Economist at the RICS and CaCHE Co-Investigator) and Neal Hudson (independent residential analyst), followed by a Q&A session and networking reception. The audience consisted of approximately 70 people including financial analysts, asset managers, industry, government and civil society.

After an introduction by Kate, Jeff started proceedings by reviewing Theresa May’s record on housing so far. He started with the positives; better defined Local Authority plans and permitted development rights to name two, before moving onto identify some areas for improvement. The first area was housebuilding, which, as Jeff noted, has become an increasingly concentrated industry, with the large housebuilders absorbing up more and more of the market share. UK rates of housebuilding are low by international standards, and Jeff set out a number of reasons why this may be so. This included the gap between permissions granted and developments completed developments, which the Letwin Review is setting out to address, and the lack of sufficient financial incentives for councils to encourage more housebuilding (although the fact that 44 councils had bid for the Continued Infrastructure Fund was cited as grounds for optimism). Jeff then went onto review some of RICS’s recent data on the housing market. Overall, he forecasted a modest increase in UK house prices, with rises expected in the East Midlands and other regions, but falls expected in London: yet another reminder that the UK has not one but many housing markets. He concluded with a review of housing transaction and mortgage approval data, again painting a regionally nuanced picture, with both indicators down in London but up in other regions.

Neal’s talk, titled ‘The Housing Crisis’ was an extremely wide-ranging and informative summary of the mess that we find ourselves in. Neal started with a familiar slide, showing the rise of the UK house price: income ratio over recent decades, but his presentation was forensic in examining the drivers of this growth and the implications for society. On the supply-side, he discussed how the post-1970’s decline in local authority housebuilding occurred partly because the population was forecast to decline, leading to a lack of demand for housebuilding funds among local authorities. That past seemed like a foreign country, as Neal demonstrated how the private housebuilding sector’s profits (and bonuses) had boomed, fuelled most recently by the Help to Buy scheme. He was sceptical of demand-side subsidies or more liberal mortgage-lending as solutions to declining home-ownership, pointing out that in the long-term, these policies would only continue to push house prices up, making home-ownership even less affordable. But he also pointed out that increases in housing supply would need to be huge and sustained over time if they were to even make a dent in affordability. Perhaps one of the most pertinent points that Neal made was that the real victims of the housing crisis are renters, and particularly the growing numbers of private renters who often have to pay large proportions of their income on rent for housing which can be poor-quality and let on a short-term basis, and there seemed to be something of a consensus in the room, or at least among the speakers, that the PRS could be better regulated.

The growth in the PRS was one of the main issues raised in the Q&A discussion, with one audience member concerned that people growing old in the PRS would have no asset to draw from to pay for social care in later life. Another audience member asked how we might incentivise or make it easier for people to downsize in older age. The removal of financial obstacles (namely, stamp duty) and the sufficient supply of appropriate housing were two proposals advanced, but I was struck by the suggestion of one audience member that in the UK there is perhaps a cultural barrier to downsizing in later life, a perception that downsizing is symbolic of ‘growing old’, that we need to better understand.